In a rare interview given to TradeWinds, Gary Brocklesby and Nicolas Busch, the founders of Navig8 shipping group, part of which is the known bunker trader Integr8, give an insight to the components of their successful business model which has grown Integr8 into one of the fastest growing bunker traders worldwide. Their modern business model now intents to transform bunkering from an archaic to a modern business sector.
Both partners share years of experience in Glencore, a traditional group where the business model was based on “the asymmetry of information”: accessing privileged information for company’s own benefit. However, the massive development of digitalisation and the growth of knowledge economy, makes this business approach look no viable any more.
Instead, according to Integr8 founders, transparency, honesty and sharing of information with the clients are the driving forces for the successful bunkering traders of the next generation. Characteristics which, according to Busch, are currently an “anathema” to the traditional model followed nowadays in the bunkering sector.
“Bunkering is without a doubt the most opaque market there is,” Nicolas Busch adds.
The market is so un-transparent that details about last fixtures of bunkers are not reported at all and actual availability is not known to anyone, unless he contacts each individual supplier. Furthermore, the origin of the product and the history of the suppliers are unknown while the quality of fuel is not actually surveyed. In such an opaque market, bunker traders are trying to take advantage of higher margins against buyers who are not informed or knowledgeable.
“There’s a vested interest throughout the supply chain for the customer to know very little”, Integr8 founders note.
As a result, the bunkering market is hit by serious contamination events which are likely to become much worse after the new low-sulfur regulations come into force, in January 2020, since the lack of transparency does not help Shipowners evaluate the quality of bunkers that they buy. What Buyers currently see is only a price. Taking into consideration that, with the new regulations, more fuel oil products will appear and blending will be increased, in the current opaque environment contamination events may take place daily, at least for the first six months after the IMO 2020 regulation comes into force, Integr8 founders estimate.
So what is the solution?
Integr8 has made available to its clients an online database with massive information about bunker actual prices and information on availability and quality. The company believes that, among other things, transparency increases clients’ dedication and creates efficiencies in the overall chain. Due to those reasons and taking into consideration the strict demands of the new regulations, Integr8 founders believe that transparency is the key that will transform the bunkering industry in the post-2020 era.
“I think you’ll see a huge transformation in the industry in 2020. People will want to know about things that previously they just weren’t interested in”. Busch notes.